Gen Z and Retirement? It turns out Gen Z are…savers. Watch my Yahoo! Finance interview for very unexpected findings from our study
- In a surprise finding by CGK: Gen Z was the #1 generation to lose their job during the COVID-19 pandemic. This experience profoundly impacted how the generation views work, savings, retirement, and more .
- The #1 criteria Gen Z looks for in a job is starting salary. This has significantly increased in importance over the last 12 months. Interestingly, the third most important criteria for Gen Z are employment benefits— such as retirement matching and pet insurance!
- 70% of Gen Z believe they should start saving for retirement right now, while 45% of Millennials have not started saving for retirement.
- While Gen Z appears more predisposed to saving and investing, they guess relatively low dollar amounts for what they think they would need for income to be able to live comfortably in retirement. This could be setting them up to not save money enough even though they’re starting to save earlier than many expected.
Young people are frequently stereotyped as not thinking enough about their financial future. This is particularly true when it comes to them saving for retirement. But is this still true today?
Based on extensive research by CGK, it turns out that the youngest generation, Gen Z, is thinking about—and taking action toward—their eventual retirement. While this may come as a surprise to some, we’ve been studying the underlying drivers of this mindset for many years at CGK. I was very excited to share our unexpected discoveries with the journalists at Yahoo! Finance. Click here to watch the full interview.
What you need to know…
The oldest members of Generation Z, now up to age 25, were pre-teens during the Great Recession. They were also often raised by Gen X parents who went through the heart of the Great Recession as employed adults.
The oldest members of Gen Z finally entered the workforce and were just starting to get some traction when: Wham-O! They collide right into the COVID-19 pandemic. As we have extensively reported at CGK, we uncovered that Gen Z was the #1 generation to lose their job during the pandemic, the #1 generation to have a reduction in work hours, and the #1 generation to have a reduction in pay. So, where does that leave Gen Z now?
Well, now Gen Z are the young adults taking part in the fastest wage-growth market in decades. But the generation carries with them the lessons of a childhood during the Great Recession, the recent experience of mass pandemic induced layoffs, and being raised by parents who had to navigate all of this as well.
The net result we see is that Gen Z is surprisingly (or maybe not so surprisingly) interested in money, personal finance, crypto, investing, and thinking about their financial future. In our most recent State of Gen Z study (not yet released, but coming soon!), the importance of starting salary to Gen Z went up significantly more than any other variable of employment. In other words, the generation is placing a premium on getting paid a premium rate.
At the same time, a majority of Gen Z in the US do not believe that Social Security will be able to financially provide for their retirement needs. In fact, CGK’s research reveals that 70% of Gen Z say they need to be saving money today to retire in the future. What makes this number significant is that 45% of their predecessors, the Millennials, are actually waiting to save for retirement.
One of the key trends to watch is that Gen Zers are doing their own research about money, saving, and investing. They may be doing this on TikTok or YouTube, but the key is that they’re starting to develop their financial knowledge, which is important. We all know that starting to save and invest money early in life is one of the most important and consistent ways to reach long-term financial goals (big h/t to the biggest financial friend of youth: compound interest).
“Millennials and Gen Z are going to be set up very differently when it comes to retirement. The oldest millennials are now well into their early 40s. And many of them have delayed saving for retirement. They’re delaying getting married, two-income households. There’s a lot that’s happened with that generation, my generation, including crashing to the Great Recession and then COVID. Gen Z’s younger. They have more time ahead of them. And they’re already saving.”
The combination of saving for retirement at an early age, seeking out employee benefits such as retirement matching, and a keen interest in being financially self-reliant are setting Gen Z up for a much more solid financial future later in life.
But what about navigating the present day? We also know that inflation is soaring, gas prices are through the roof, and housing costs continue to grow seemingly daily. We know more twentysomethings are living with their parents than have in decades. What about preparing for the unexpected? Well, it looks like many in Gen Z are taking action on that, too, which is very promising…
“In our State of Gen Z study, we found that 26% of Gen Z already has $1,000 saved in an emergency account. They’re putting that away for emergencies, which we think is very positive.”
Gen Z has decades to go before they reach the traditional retirement age (if such a thing exists in 2062), but a surprising number of them are taking actions today that other generations would find to be unexpectedly responsible. In fact, if Gen Z continues to benefit from rising wages, hire savings rates, and investing for retirement, they may end up being much better positioned for retirement than many Millennials (which is not fun to write given I am a Millennial)! But there is one big caveat: CGK’s study also found that 41% of Gen Z view cryptocurrency as a safe investment. Maybe they’re right? Time and Bitcoin, Dogecoin, Ether, and more will tell…
It is an exciting time to study Generation Z. This generation is full of surprises, personality, influence, and more. The best part: every study we lead continues to uncover new insights that the world needs to know!
At The Center for Generational Kinetics, we will continue to watch closely as Gen Z and every generation further emerge and takes action toward creating the future they want. Stay tuned for our next State of Gen Z® study releasing soon!
As always, thank you for being on this journey of research, insights, and discovery with us and Generation Z. Please reach out if there is a meeting or event where I can speak for you about the hidden generational trends leaders, marketers, and employers need to know!
Posted: April 6th, 2022
Categories: Gen Z | Generations | Media | Research
Written by Jason Dorsey
Jason Dorsey is an acclaimed generations and behavioral researcher and speaker. He's received over 1,000 standing ovations for his unique keynote presentations. Jason has led over 120 research studies. Adweek calls him a "research guru." His mission is to deliver new insights and practical strategies that solve business challenges for leaders.
